The formula (transparent + tweakable)

The calculator does two big steps: it projects your nest egg at retirement, then estimates the portfolio size needed to support your retirement spending goal using a chosen withdrawal rate. The readiness score is simply how close you are: (projected ÷ required), scaled to 0–100.

• Growth on current savings: FV = PV × (1+r)ⁿ
• Growth on monthly contributions: FV = PMT × ((1+r)ⁿ − 1) / r
• Monthly rate: r = (1 + annualReturn)^(1/12) − 1

• Spending goal at retirement (inflation-adjusted): FutureSpending = SpendingToday × (1+inflation)^years
• Net spending from investments: Net = FutureSpending − GuaranteedIncome
• Required portfolio: Required = NetAnnual / (withdrawalRate)

This is a simple, explainable model. Real plans also consider taxes, healthcare, fees, sequence-of-returns risk, and changing spending patterns — but a simple model is often the best first step.

How to interpret your score

The readiness score is not a verdict — it’s a signal. Use it to decide what lever to pull.

• 0–49 (Behind): You likely need to change at least one major lever (save more, work longer, or reduce spending).
• 50–79 (Close): You’re in striking distance. Small improvements (or conservative assumptions) matter most.
• 80–100 (On track): Under these assumptions, your portfolio target is mostly covered.

• If inflation is higher than your returns, your “future spending” target climbs fast.
• If you lower withdrawal rate (e.g., 3.5% instead of 4%), the required portfolio jumps a lot.

Retirement readiness, explained (with examples)

Retirement planning sounds complicated, but the core idea is surprisingly simple: you’re trying to build an asset base that can safely fund your spending for a long time. The reason people get stuck is that “How much do I need?” depends on assumptions — and different assumptions can swing the answer by hundreds of thousands of dollars. This page makes those assumptions visible, so you can test scenarios instead of guessing.

Start with time: your current age and retirement age determine the number of years you have to compound. Compounding is the quiet engine of retirement readiness: the earlier years usually matter most because money has more time to grow. If you’re young, your monthly contribution can dominate the outcome; if you’re closer to retirement, your existing savings and your retirement age choice usually matter more.

Then estimate future value: the tool treats your current savings as a lump sum (PV) and your monthly contributions as an annuity (PMT). Both are grown at the same expected annual return (converted to a monthly rate). The math is standard finance: PV grows by (1+r)ⁿ, and a stream of contributions grows by the annuity factor ((1+r)ⁿ − 1)/r. If expected returns are lower, your future value shrinks; if returns are higher, it grows — but higher expected return often means higher volatility, which is why you should test conservative scenarios too.

Next, estimate what you’ll need: most people think in today’s dollars (“I want $6,000/month in retirement”). But if inflation is 2.5% per year for 30 years, that $6,000 becomes roughly $12,600 in nominal dollars at retirement. That doesn’t mean you’re living larger — it means prices rose. This tool inflates your spending goal forward using SpendingFuture = SpendingToday × (1+inflation)^years. You can slide inflation to see how sensitive the target is.

Guaranteed income reduces the target: if you expect Social Security, a pension, or other guaranteed income, that income offsets the spending you need from your investment portfolio. For example, if you need $12,000/month at retirement and expect $3,000/month from guaranteed sources, your portfolio needs to supply the remaining $9,000/month. The tool subtracts guaranteed income after inflation adjustment. (In real life, Social Security can also rise with inflation; this calculator keeps it simple and assumes the amount you enter is already a rough retirement‑time estimate.)

Withdrawal rate is the “bridge” between savings and income: a withdrawal rate answers: “What fraction of my portfolio can I withdraw each year without running out too early?” A common rule of thumb is 4% per year for a long retirement horizon, but the “right” number depends on market conditions, fees, taxes, asset allocation, and how flexible your spending is. Using 3.5% is more conservative; 5% is more aggressive. Because RequiredPortfolio = AnnualNeed / WithdrawalRate, small changes in this slider can change the required portfolio a lot.

Example A (early planner): Suppose you are 30, plan to retire at 65 (35 years), have $50,000 saved, contribute $600/month, expect 7% annual return, and assume 2.5% inflation. Your savings and contributions compound for decades, potentially producing a nest egg in the seven figures. Your spending target at retirement, however, may also rise sharply because inflation compounds too. If your desired spending is $6,000/month today, it becomes much higher at retirement. A readiness score in the 60–90 range often means you’re close — then the question becomes: do you want to increase contributions slightly, delay retirement by a year or two, or reduce future spending expectations?

Example B (late starter): Suppose you are 55, plan to retire at 67 (12 years), have $150,000 saved, and contribute $1,000/month. Even with solid returns, you have fewer compounding years. In this scenario, your retirement age choice and contribution rate dominate the outcome. A readiness score below 50 isn’t a failure — it’s a prompt to explore levers: increase monthly savings, reduce retirement spending, or work longer. Often, the best “return” in late years comes from reducing fees, increasing savings rate, and avoiding major financial mistakes.

What this tool intentionally ignores (so you can think clearly): taxes, account types (Roth vs traditional), healthcare costs, long‑term care, investment fees, and irregular savings patterns. Those are important — but including them too early can create false precision. Instead, use this as a first pass: find your rough gap, then refine with more detailed planning if needed.

A practical next step routine: run three scenarios: (1) optimistic (higher returns, lower inflation), (2) base case (your best estimate), and (3) conservative (lower returns, higher inflation, lower withdrawal rate). If you’re “on track” even in the conservative scenario, you’re likely in a strong position. If you’re behind only in the conservative scenario, you may simply need a cushion. If you’re behind in all scenarios, pick one lever and commit to it for 90 days (for example, +$200/month contributions) — then re‑run the calculator and watch the score move.

Reminder: this is an educational estimate. Investing involves risk, including possible loss of principal. Use the outputs as a conversation starter and planning guide.

Frequently Asked Questions

• Is a 100/100 score “guaranteed retirement”?

  No. It only means that under your chosen assumptions, your projected nest egg meets or exceeds the estimated required portfolio. Real outcomes depend on markets, taxes, fees, and life changes.

• What return should I use?

  Use a conservative estimate if you want a safety margin. Many people test a range (e.g., 5%–8%). If your plan only works at very high returns, it may be fragile.

• Why does inflation matter so much?

  Because it compounds over decades. Even “normal” inflation can double prices over a long horizon, which increases the nominal income you’ll need in retirement.

• What withdrawal rate should I pick?

  Lower rates are safer but require more savings. Higher rates are riskier but require less. Try 4% as a starting point, then test 3.5% for a more conservative plan.

• Does this include taxes and healthcare?

  No. Think of your “desired spending” input as your after‑tax spending goal. If you want a buffer, increase desired spending or lower the withdrawal rate.

• How can I improve my readiness fastest?

  Increase savings, delay retirement, or reduce future spending. In many cases, delaying retirement by 1–3 years is one of the most powerful levers because it adds contributions and reduces retirement years.

Use this responsibly

Treat the output as a directional guide. If you’re near retirement or making large allocation changes, consider a more detailed plan. A simple rule: if a decision is hard to undo, slow down and sanity‑check it.

• Re-run with lower return and higher inflation.
• Try a lower withdrawal rate (e.g., 3.5%).
• Make sure your plan still works without perfect markets.